Microsoft’s Total Current Liabilities Essay

Exclusively available on Available only on IvyPanda® Made by Human No AI

Introduction

A balance sheet is a financial statement that shows how much money a company is operating with. It also shows how much property they posses in terms of assets and how much they owe in terms of liabilities to its creditors. This information is important to potential creditors, investors and employees of the company. A balance sheet also provides information that is educative to the public for decision making. Orit (2000), describes an income statement as a “financial statement that shows how the company is operating in terms of sales turn over , cost of sales and the expenditures used for running the year”( Orit ,4).

Businesses should continuously use the financial information to know how profitable they are running and how the money is being used for operations. Also companies that trade publicly need to produce financial reports on a regular basis. Private companies such as financial institutions have adopted the quarterly basis to report on the changes that have occurred in the year. The Microsoft incorporation posted total current liabilities worth $ 22,847 million in the 2011 financial period

Importance of information to potential creditors

Creditors are capital issuers to the company for its operation .Financial statements are quite important to all businesses as they are the real indication of the direction that the business is heading. Your balance sheet would indicate to the creditors how much they are supposed to lend to your company. Also the income statement would show whether you are making profits or losses in the long run.Profits and losses experienced would indicate what kind of decisions the company is making in repaying them. Creditors use balance sheet information to see whether you are able to finance your operations well to repay them in the required time and pay your debts.

Importance of information to investors

Potential investors and existing investors can use the financial information to judge the level of risk which the company is operating in. A large balance sheet would indicate that the company is experiencing a lot of activity which means it is experiencing some kind of growth. A small balance sheet shows that the company is experiencing slow growth and less activity.

Investors who are planning to invest in the company by buying shares have to look at both the balance sheet and the income statement to make their decisions. Investors need to look at the kind of activity the company is experiencing such as the level of liability and cash flows for the year. If the business has huge level of liability compared to the cash flows then it means it would not be a good decision to invest in the company. On the other hand if the company’s income statement shows it is experiencing high profits and the level of debt such as creditors and liabilities is low, it would be wise to invest in such a company since it is making money.

Importance of information to employees

The employees are the internal users of the company and it would be important to gain insight into what the company is made up of at that specific time. Employees such as the management use both the income statement and balance sheet to decide on what would be the best option to finance their operations during the year and coming years. An income statement would also show them the activities such as sales turnover, cost of sales and the expenditure the management used in acquiring cash flows. If the net profits are low, it would indicate that the company is experiencing a high level of expenditure and cost of sales. Therefore they should take relevant steps to return the company to profitability.

Reference

Orit, J.G (2000). Accounting Terms. Oxford, England: Oxford University Press.

More related papers Related Essay Examples
Cite This paper
You're welcome to use this sample in your assignment. Be sure to cite it correctly

Reference

IvyPanda. (2022, April 7). Microsoft’s Total Current Liabilities. https://ivypanda.com/essays/microsofts-total-current-liabilities/

Work Cited

"Microsoft’s Total Current Liabilities." IvyPanda, 7 Apr. 2022, ivypanda.com/essays/microsofts-total-current-liabilities/.

References

IvyPanda. (2022) 'Microsoft’s Total Current Liabilities'. 7 April.

References

IvyPanda. 2022. "Microsoft’s Total Current Liabilities." April 7, 2022. https://ivypanda.com/essays/microsofts-total-current-liabilities/.

1. IvyPanda. "Microsoft’s Total Current Liabilities." April 7, 2022. https://ivypanda.com/essays/microsofts-total-current-liabilities/.


Bibliography


IvyPanda. "Microsoft’s Total Current Liabilities." April 7, 2022. https://ivypanda.com/essays/microsofts-total-current-liabilities/.

If, for any reason, you believe that this content should not be published on our website, please request its removal.
Updated:
This academic paper example has been carefully picked, checked and refined by our editorial team.
No AI was involved: only quilified experts contributed.
You are free to use it for the following purposes:
  • To find inspiration for your paper and overcome writer’s block
  • As a source of information (ensure proper referencing)
  • As a template for you assignment
Privacy Settings

IvyPanda uses cookies and similar technologies to enhance your experience, enabling functionalities such as:

  • Basic site functions
  • Ensuring secure, safe transactions
  • Secure account login
  • Remembering account, browser, and regional preferences
  • Remembering privacy and security settings
  • Analyzing site traffic and usage
  • Personalized search, content, and recommendations
  • Displaying relevant, targeted ads on and off IvyPanda

Please refer to IvyPanda's Cookies Policy and Privacy Policy for detailed information.

Required Cookies & Technologies
Always active

Certain technologies we use are essential for critical functions such as security and site integrity, account authentication, security and privacy preferences, internal site usage and maintenance data, and ensuring the site operates correctly for browsing and transactions.

Site Customization

Cookies and similar technologies are used to enhance your experience by:

  • Remembering general and regional preferences
  • Personalizing content, search, recommendations, and offers

Some functions, such as personalized recommendations, account preferences, or localization, may not work correctly without these technologies. For more details, please refer to IvyPanda's Cookies Policy.

Personalized Advertising

To enable personalized advertising (such as interest-based ads), we may share your data with our marketing and advertising partners using cookies and other technologies. These partners may have their own information collected about you. Turning off the personalized advertising setting won't stop you from seeing IvyPanda ads, but it may make the ads you see less relevant or more repetitive.

Personalized advertising may be considered a "sale" or "sharing" of the information under California and other state privacy laws, and you may have the right to opt out. Turning off personalized advertising allows you to exercise your right to opt out. Learn more in IvyPanda's Cookies Policy and Privacy Policy.

1 / 1